Crumbling credit markets, falling interest rates, subprime borrowing, mortgage crisis and on and on.  With all of the financial terminology being thrown around, the whole borrowing market can be a little bit overwhelming.  Let’s cut through the junk and talk about the things that matter when you are searching for a home loan in today’s market.

It’s a buyers market right now, especially if you have good credit and cash for a down payment.  Rising numbers of homes on the market and low interest rates means there are deals to be had.  The flip side is that the credit markets have tightened up – in other words, it’s tougher to qualify for a loan.  Here’s why – those same lenders who were willing to let anyone and everyone borrow money over the last two years have painted themselves into a corner.  People who should not have been able to get a mortgage got them and then (shockingly) could not pay them back.  Today’s borrowers are paying for the sins of yesterday’s borrowers.  So what does that mean for today’s buyers?

1.      It’s tougher to get qualified so get qualified early.  It gives you peace of mind and lets sellers and their agents know that you are serious.

2.      Make sure you pay all of your bills on time.  It will come back to haunt you if you miss payments or make late payments (more than 30 days).

3.      Just because you “qualify” for a $300,000 loan does not mean you should buy a $300,000 house.

4.      Shop for the right lender.  Ask friends, family members and co-workers to recommend someone they used. 

5.      You are responsible for your finances so understand your loan terms!!!  Don’t take your lender’s word that you can afford a two-year option ARM.  Were some lenders misleading or inappropriate in the way they lent money?  Absolutely, but every borrower signs their name to the loan documents.  Know what you are signing, ask questions and don’t be afraid to tell your lender what you think.  You are the one promising to pay back a

The bottom line is that the market is ripe for qualified buyers.  Combine extremely low interest rates and a market that MAY be near the bottom in terms of home values (depending on who you believe) and you have a terrific scenario for buyers.  Follow the simple advice above and you’ll be well on the way to a positive home buying (and borrowing) experience.

Happy Buying and Selling!

OK – this one is for all you sellers out there, especially those folks who are new to the real estate game.  What does it take to sell your home fast…and for top dollar?  First, it is generall said that every house will sell at a certain price.  Unfortunately, that price may not always be aligned with the seller’s expectations or hopes.  There are a lot of factors that contribute to the final sales price – some you can control and some you can’t.

What you can’t control…

• The market – sometimes you can do everything right but you still can’t sell the house for what you believe is a reasonable price.  So make sure you manage your own expectations (see below).
• Timing and luck – So you missed the perfect buyer who just bought down the street.  It turns out he tried to visit your house but you had company in town so you had to decline the showing.  There are close calls in real estate – sometimes you get lucky and sometimes you don’t.

What you can control…

• A clean house! – You house has to be as close to spotless as possible.  If necessary, spend an entire day before you put the house on the market and scrub down the whole place.  Or, hire a maid for $150…it will be money well spent.  You may have a serious buyer come to see the house the first day on the market so do NOT delay the deep cleaning.
• De-clutter – it has to be said that less is generally more.
• Stage the house – This goes with de-cluttering but can be critical.  If you don’t want to pay a professional staging company (I don’t) then have some good friends and family members come over and give their honest opinions.  Don’t take it personally!
• Accommodate all showings – Yes, it can be a pain but you never know which looker will be you buyer.
• Find a great realtor – Studies show that homes sold with a realtor sell for 10%+ more than homes sold by owners.
• Be reasonable and manage your own expectations – your realtor can help with this but you have to be realistic.  If your house isn’t selling, it might be priced too high.  No one wants to hear this but sellers often have unrealistic expectations, especially in a down market.

If you want to sell fast, be willing to compromise on price and understand the realities of the marketplace.

Happy buying and selling!

MR

According to Irvine-based RealtyTrac Inc., a total of 223,538 foreclosure filings were reported in September, up from 112,210 in the same month a year ago.  However, the number of filings in September was down 8 percent from August’s 243,947, the firm said. 

While I’d like to think this is as bad as things will get, I’m not so sure.  The loose credit market of 2-3 years ago lasted more than a few months and that leads me to believe that those 2 and 3 year ARMs that are coming due will continue to ripple through the market for several months to come.  These adjustable rate mortgages are now forcing homeowners into one of three decisions:

1. Pay the higher monthly payment and stay in the house.  (This is not always an option for cash-strapped homeowners who are often in a home they cannot afford.)
2.  Refinance.  (This is also not an option for everyone because the credit markets have tightened significantly and those same people who were stretched into their current mortgage are now unable to qualify for a refinanced note.)
3. Let the house be foreclosed upon and move on.

Unfortunately, a lot of people believe they have only one option and that is to just allow the bank to foreclose on the home.  This may seem like the easiest option at the time but the long-term consequences (impact on credit scores and inability to obtain financing in the future) are often not fully considered. 

Here’s the silver lining in all of this mess - qualified buyers are now in control and are able to be very selective in their home search.  We can also expect to see a boost in the rental market as more people are forced to rent rather than buy.  So, it would appear to be a great time for investors to snap up properties at a bargain and find renters who are can afford to pay rent but cannot qualify for a home loan in today’s market. 

Happy buying and selling,

MR

Well, the real estate market continues to struggle in the midst of the mortgage crisis and falling demand for homes across the country.  According to a recent article (10/02/07) on Yahoo finance, “The National Association of Realtors said Tuesday its seasonally adjusted index of pending sales for existing homes fell 6.5 percent from July and 21.5 percent from a year ago.  August’s reading of 85.5 was below analysts’ expectations and the lowest ever for the index, which started in January 2001. Analysts surveyed by Briefing.com had predicted the index would fall by 2 percent from July.”  So, what does this mean for you?  If you are a buyer, this is great news!  Sellers continue to watch their homes sit on the market and are obviously more willing to negotiate any offers.  Furthermore, mortgage companies are looking for well-qualified buyers and continue to offer historically low mortgage rates. 

As for you sellers out there, it’s a tough market.  However, if you’re lucky enough to own property near a college campus, you should be somewhat insulated from the real estate lull gripping much of the country.  Students and alums will always need a place to live and owning property near a college or university should ensure a moderate to high level of demand for fairly priced homes, particularly in the spring and summer months.  If you need to unload a property, market it to students (and their parents) and consider renting as an option.  Renting allows you to build equity and capture the long-term price appreciation that can be gained by owning property near a college campus.

Happy buying and selling,

MR

Welcome to the EduRealty.com blog. Here, we will be discussing general real estate market issues, as well as highlighting the markets near universities.